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Functions and CALL Routines

COMPOUND Function



Returns compound interest parameters.
Category: Financial

Syntax
Arguments
Details
Examples

Syntax

COMPOUND(a,f,r,n)


Arguments

a

is numeric, and specifies the initial amount.

Range: a [ge] 0
f

is numeric, and specifies the future amount (at the end of n periods).

Range: f [ge] 0
r

is numeric, and specifies the periodic interest rate expressed as a fraction.

Range: r [ge] 0
n

is an integer, and specifies the number of compounding periods.

Range: n [ge] 0

Details

The COMPOUND function returns the missing argument in the list of four arguments from a compound interest calculation. The arguments are related by the following equation:

[equation]

One missing argument must be provided. A compound interest parameter is then calculated from the remaining three values. No adjustment is made to convert the results to round numbers.

If n=0, then [equation] and [equation] are equal to 1.

Note:   If you choose r as your missing value, then COMPOUND returns an error.  [cautionend]


Examples

The accumulated value of an investment of $2000 at a nominal annual interest rate of 9 percent, compounded monthly after 30 months, can be expressed as

   future=compound(2000,.,0.09/12,30);

The value returned is 2502.54. The second argument has been set to missing, indicating that the future amount is to be calculated. The 9 percent nominal annual rate has been converted to a monthly rate of 0.09/12. The rate argument is the fractional (not the percentage) interest rate per compounding period.

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